Overview of Global Hospital Budgeting

in the State of Maryland

Joshua M. Sharfstein, M.D.

June 2017

© 2015/2016, Johns Hopkins University. All rights reserved.

Disclosure

Dr. Sharfstein is a consultant for Audacious Inquiry, a

Maryland-based health IT company and with Sachs Policy

Group, a healthcare consulting practice based in New York

City.

© 2015/2016, Johns Hopkins University. All rights reserved.

Hospital Payment in Maryland

• Since the late 1970s, the Maryland’s quasi-public Health Services Cost Review Commission sets inpatient and outpatient hospital rates for all public and private payers.

• Essentially, each hospital received a rate card, and all payers pay off of the rate card

• Over 35 years, Maryland’s rate-setting system:

– Eliminated cost-shifting among payers

– Allocated cost of uncompensated care and medical education among all payers

– Allowed usage of creative of incentives to improve quality and outcomes

© 2015/2016, Johns Hopkins University. All rights reserved.

2013: Crisis in the Maryland System

• Medicare participation required Maryland to keep rate of

growth of prices below national trends

© 2015/2016, Johns Hopkins University. All rights reserved.

What to do?

• Crisis in healthcare costs = opportunity for health?

• Maryland had a unique opportunity to restructure hospital

payment in order to control costs and incentivize

prevention.

© 2015/2016, Johns Hopkins University. All rights reserved.

A Pilot: Total Patient Revenue, Meaning a Global Budget Across All Payers

*Strong Incentive for Clinical Transformation*

Header/Full Bleed Image

Name/Subject Subhead

Title/caption

Title/caption

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Concept: Move All Hospitals to Global Budgets

• Former Hospital Payment Model:

• Volume Driven

• New Hospital Payment Model:

• Population Driven

Units/Cases

Hospital RevenueAllowed

Revenue for Target Year

Revenue Base Year

Rate Per Unit or Case (Updated for Trend and Value)

Updates for Trend, Population, Value

• Known at the beginning of year• More units does not create more

revenue

• Unknown at the beginning of year • More units creates more revenue

Sou

rce: HSC

RC

© 2015/2016, Johns Hopkins University. All rights reserved.

Key Points

• Hospitals can use revenue to invest in prevention outside

the walls

• Year-over-year adjustments in budgets based on:

• Population changes

• Market shifts

• Quality

• Hospitals keep revenue as services decline, as long as no

market shifts or quality problems

• Fewer preventable admissions = better bottom line

© 2015/2016, Johns Hopkins University. All rights reserved.

Western Maryland Health System

Source: WMHS

© 2015/2016, Johns Hopkins University. All rights reserved.

Source: WMHS

© 2015/2016, Johns Hopkins University. All rights reserved.

Source: WMHS

© 2015/2016, Johns Hopkins University. All rights reserved.

Source: WMHS

© 2015/2016, Johns Hopkins University. All rights reserved.

© 2015/2016, Johns Hopkins University. All rights reserved.

Keys to Success (1)

• Community collaborations with physicians, nursing

homes, and community organizations around primary,

secondary, and tertiary prevention

© 2015/2016, Johns Hopkins University. All rights reserved.

Outside the Walls

© 2015/2016, Johns Hopkins University. All rights reserved.

Keys to Success (2)

• Sharing and effective use of electronic health data

CRISP Core Services

1. POINT OF CARE: Clinical Query Portal

• Search for your patients’ prior hospital records (e.g., labs, radiology reports,

etc.)

• Monitor the prescribing and dispensing of PDMP drugs

• Determine who are the other members of your patient’s care team

2. CARE COORDINATION: Encounter Notification Service (ENS)

• Be notified when your patient is hospitalized in any MD, DC or DE hospital

• Receive special notification about ED visits that are potential readmissions

• Know when your MCO member is in the ED

3. POPULATION HEALTH: CRISP Reporting Services (CRS)

• Use Case Mix data and Medicare claims data to:

o Identify patients who could benefit from services

o Measure performance of initiatives for QI and program reporting

o Coordinate with peers on behalf of patients who see multiple providers

177/10/2017

Key Performance Indicator Dashboard

18

Encounter Notification Services

• Subscribers submit a patient panel to CRISP and identify which types of alerts they would like to receive

• Phase 1 notifications included only demographic information and the event types; Phase 2 included chief complaint and discharge diagnosis; Phase 3 includes a CCDA summary of care

• Hospitals can auto-subscribe to 30 day real-time readmission alerts

• CRISP has ADT exchange partnerships with DHIN in Delaware and ConnectVirgnia. Anytime a Maryland or DC resident arrives at a Delaware or Northern Virginia hospital CRISP receives the ADT and can route it to a subscriber.

© 2015/2016, Johns Hopkins University. All rights reserved.

HIE: Natural Advantage over Individual Hospital Data

Horrocks D, Kinzer D, Afzal S, Alpern J,

Sharfstein JM. The Adequacy of Individual

Hospital Data to Identify High Utilizers and

Assess Community Health. JAMA Intern

Med. 2016 Apr 25.

Example: Overdose21

2012

Example: Dental22

© 2015/2016, Johns Hopkins University. All rights reserved.

Maryland’s Hospital Model

23

“The boldest proposal in the United States in the last half century to grab the problem of cost growth by the horns.”

– Professor Uwe Reinhardt, Princeton University

© 2015/2016, Johns Hopkins University. All rights reserved.

Health Affairs Blog, 1/17

• $319 total cost of care savings

• 48% reduction in potentially preventable conditions

• Readmissions gap down by 57%

© 2015/2016, Johns Hopkins University. All rights reserved.

Acknowledgments

• Donna Kinzer, John Colmers, and Health Services Cost

Review Commission

• Maryland Department of Health and Mental Hygiene

• Governor Martin O’Malley

• Maryland Hospital Association

• CRISP